Jamie Dimon thinks that because people now have iPhones, inequality is a thing of the past. At an event in Detroit last week, the JP Morgan CEO said declining median incomes don't mean people are worse off than they used to be: “If you go back 20 years ago, cars were worse, health was worse, you didn’t live as long, the air was worse. People didn’t have iPhones.”
Dismissing poverty and inequality because some poor and middle-class people own things that used to be considered luxuries is a trope detached from reality. And yet it comes up over and over.
Rush Limbaugh, along with Fox News' Bill O’Reilly and Stuart Varney, seized on a 2011 Heritage Foundation report to argue that the true economic status of America’s poor should be upgraded with scare quotes to “poor” because some of them have refrigerators, microwaves, air conditioners, dishwashers, TVs, coffeemakers and cell phones. "The Joad family didn’t have a TV or a microwave" seems to be the beginning and end of the argument.
What these critics never mention is that the poor suffer wildly disparate access to basic economic and human needs like housing, education, healthcare and due process under the law. Also never mentioned is the fact that the value of these goods, combined, is around a few hundred dollars -- not high enough to lift a family out of poverty.
Poor people own these things because they are inexpensive and because they have gotten cheaper over the years. Last year Annie Lowrey, then at The New York Times, charted the dramatic drop in prices for consumer electronics, clothes and cars:
Meanwhile, these things have gotten more expensive: health care, child care and education. There’s a reason medical bills and not Best Buy shopping binges are the leading cause of personal bankruptcy. “America is a place where the luxuries are cheap and the necessities are expensive,” professor Joseph Cohen of Queens College told the AP last year.
Some of those "luxury" items, such as cells phones and cars, are necessities for meaningful employment -- in most jobs at most American cities, you need to find an open job, apply for it, obtain it and then transport yourself there.
Dimon’s argument that income inequality isn’t actually bad because the iPhone exists, cars are better and Americans, on average, live three years longer than they did two decades ago is similarly misguided. It’s not as crass and mean-spirited as the idea that poverty isn’t bad anymore simply because of the tautology that cheap things are affordable to many people. But it’s the polite-company corollary to Fox News’ poverty trutherism.
Dimon argues that what economists refer to as consumption inequality, a measure of the gap in how much people spend, mitigates rising income inequality. But unfortunately, that's not the case; consumption inequality “closely tracked” income inequality from 1980 to 2007, research from Mark Aguiar and Mark Bils, both of the University of Rochester, shows. That means that the gap in how much Americans spend has grown, not narrowed, just like the gap in how much money they make.
Those were not isolated findings. A paper by Orazio Attanasio of University College London, Erik Hurst of the University of Chicago and Luigi of Stanford University found that contrary to the idea that “the increase in consumption inequality is still an open debate ... consumption inequality increased substantially” between 1980 and 2010. And it increased “nearly the same amount as income inequality.”
In his recent remarks, Dimon is also aligning himself with Andy Warhol, who famously said that “America started the tradition where the richest consumers buy essentially the same things as the poorest. ... The President drinks Coke, Liz Taylor drinks Coke, and just think, you can drink Coke, too. A Coke is a Coke and no amount of money can get you a better Coke.”
Warhol was right, but only about inexpensive, interchangeable things. The reality of consumption inequality is masked when we think of spending only as the ability to buy cheap, ubiquitous products.